Apple Inc. (AAPL) Watch Sales Dive – Apple Watch 2 to the Rescue

Apple Inc (AAPL) Apple Watch

Apple Inc. , as per a report from IDC on Thursday, is losing share to rival Samsung in the smartwatch market. The IDC also reported that the release of Apple Watch 2 later this year may persuade a flurry of first-time buyers.

Apple Inc. (NASDAQ:AAPL) Watch

Apple has not lost yet

In the Q2, the shipments of Apple Watch dropped 55% y-o-y, from 3.6m to 1.6m. As per industry tracker IDC, this caused a drop in Apple Inc. ’s share in the global smartwatch market from 72% to 47%.

Roger Kay – the founder of tech consulting company Endpoint Technologies Associates – said the decrease in Apple Watch shipment could be because of tough comparisons to the Q2 of 2015, when the watch made its debut. “The numbers look bad because [Apple] did well out of the gate,” Kay said. “It’s a hard compare, because essentially there was an overabundance of enthusiasm in the beginning.”

Kay underlined that the big drop does not, however, mean that the Cupertino-based firm has lost or the smartwatch market is not growing. By far, the iPhone maker is still the market leader. Last quarter, Samsung, LG, Lenovo and Garmin together sold fewer smartwatches than Apple. But, the iPhone maker recorded a double-digit decline, whereas each of those companies recorded double-digit growth.

Apple has not yet made the watch sales official. The watch is in the “other products” section of Apple’s financial statements, which includes Apple TV and Apple Music as well. Revenue from other products jumped 30% last quarter, to $2.2bn. The revenue from the iPhone was $32.8bn, $5.1bn for the Mac, $6bn for services, and $4.4bn for the iPad. The iPhone maker will report quarterly earnings on Tuesday.

Apple Watch 2 to trigger next sales cycle

Last September, the tech giant released watchOS, which opened up the platform to native applications. As per App Annie, the smartphone giant reported having 6,000 native apps in Watch OS 2 as of WWDC in June, and overall, the watch has more than 19,000 apps.

However, the launch of Apple Watch 2 is expected to trigger a new sales cycle, and potentially new consumers. Ramon Llamas – research manager for IDC’s wearables team – said “I think people are waiting around for the next thing.”

For the first time, the global shipments of smartwatches declined in the Q2 by 32%, which was mostly because of Apple Inc. . However, IDC predicts that with the help from the Apple’s next-gen watch and a number of improvements from other vendors along with a growing interest in the wearable technology, the global smartwatch market will return to growth in 2017.

Llamas said when smartwatches will appeal more to a broader audience, developers build more native apps, and smartwatch platforms will advance and gain cellular connectivity, this would, eventually, lead to a growing market.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.


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